[BSC Vietnam] The Ups And Downs Of Air Turbulence (PC1) 17.07.2017 (DELAY)

Jul. 19, 2017 7:24 AM ET|Includes: VanEck Vectors Vietnam ETF (VNM)

Summary

Stocks posted broad losses, with all 10/10 sectors end in the red. Finance (-2.71%), healthcare (-2.51%) and material (-2.13%) led the index

PC1 (VND33,300 Market Cap: VND 3,512 bn – Div yield: 7.5% – P/E 2017 FW: 11x – P/B 2017 FW: 1.3 target price: VND 43,000/share – Upside 19.4%

State Divestment & IPO. One of our key investment themes this year which has been sleeping tight in the last 6 moths (link). Ony 6/45 SOE finished their IPO in the first

Among expected SOE divestment list (VNM, BMP, NTP, VCG, BHN, SAB.), the two beer stocks and NTP climb today. Over the longterm, State divestment and IPO are good for the market, but over short-term it can create the shortage of cash flow for listed market.

Dear Value clients and partners,

·         Stocks posted broad losses, with all 10/10 sectors end in the red. Finance (-2.71%), healthcare (-2.51%) and material (-2.13%) led the index at the worst drop in months. The only sector which look less depressed is Consumer discretionary (-0.35%) thanks to MWG.

Today’s Markets:

·         Indexes, VN-Index -1.12%, Hnx-Index -1.78%, Upcom -1.15%

·         Active, HOSE: FLC, ITA, HQC, HHS VHG.   HNX: SHB, KLF, PVX, ACB, PVS.

·         Foreigner, Buy: VCI, KDC, PHR, VCB, GTN. Sell: VNM, HSG, HPG, KBC, and CTG.

·         Notice stocks:  ROS, HBC, HSG, SBT, SSI, FLC, ACB, DST, PVS

·         Trading volume: ~334.6  million shares

·         Trading value: VND 5599.4 ~ 249.6 USD mil

·         Foreigner transaction Net: -5.93 mil USD Sell 40.80 USD million and Buy 34.87 USD million

 

Corporate update:

 

·         PC1 (VND33,300 per share – 4.6% Market Cap: VND 3,512 bn – VND 36,000/share –– Div yield: 7.5% – P/E 2017 FW: 11x – P/B 2017 FW: 1.3 – FO available: 19.3% ~ 18.9 mil shares). Our analyst is bullish with PC1 in medium and long-term with target price: VND 43,000/share – Upside 19.4%. main business update:

·         The leading company in power system construction (40% market share): This segment is expected to recover to 2,178bn revenue (+20% YoY) in 2017 thanks to good disbursement of the state budget & big contract: the 500kV Circuit 3 project (6,418 bn in investment).

·         Steel structure production: 2017 Rev is projected to reached 654bn (+15% YoY), which is attributed to additional 5,000 tons of steel construction export contract signed and with AG Ajikawa (the PC1’s last year production ~ 35,000 tons/50,000 tons).

·         PC1 owns the top 2 portfolio of hydroelectric plants on the exchange (162MW in total), which is expected to earn the revenue of 273 bn in 2017. This would increase to 670-700bn in 2020 when all the plants operate.

·         Catalyst: Mỹ Đình Plaza 2 is forecasted to generate the revenue of around 1,000 bn in 2018. Scale: 472 apartments, price: 27-30 mil/m2, total Rev estimated ~ 1,200 bn, The profit from join venture (Cao Bang Steel JSc, PC1 owns 25%) is expected to rise from 60bn loss in 2016 to 11bn profit in 2017 as the forecasted output exceed breakeven point. 1Q2017 update: start profiting 190 mil.

Comments:                                                         

·         Technical Analysis look: The Ups and Downs of Air TurbulenceMost top Blue chips fell today as VN30 closed lose over 14 point ~1.89%. The turbulence is wilder than usual and our TA believe that the Vnindex is likely to test the 750-760 zone and HNxindex to ~98 zone in coming weeks. Seat belt please.

·         State Divestment & IPO. One of our key investment themes this year which has been sleeping tight in the last 6 moths (link). Ony 6/45 SOE finished their IPO in the first half of 2017 well behind Gov’s schedule. Last week, the Gov stress again the state divestment issue while the Deputy PM said „The Government will reconsider the leadership responsibilities of officials who are yet to fulfill State-owned Enterprises (SOEs) privatization and divestment”. Among expected SOE divestment list (VNM, BMP, NTP, VCG, BHN, SAB…), the two beer stocks and NTP climb today. Over the longterm, State divestment and IPO are good for the market, but over short-term it can create the shortage of cash flow for listed market.

Cheers

Long Tran

 

https://seekingalpha.com/instablog/13489352-long-tran-thang/5014082-bsc-vietnam-ups-downs-air-turbulence-pc1-17_07-2017-delay

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